In our last newsletter, we mentioned the news that Gordon Brown had announced the phasing out of tax and National Insurance relief on childcare vouchers and the consequent uproar this has caused.
Somewhat belatedly after this announcement the issue has now made the national press and has prompted a number of prominent backbench Labour MPs to urge the Prime Minister to do a u-turn on the proposals, as they fear this will cost the party seats at the election. According to recent statistics 74% of those who are currently in a scheme taking childcare vouchers are basic rate taxpayers.
The latest news reported is that the Government has bowed to pressure from Labour backbenchers and will rethink the decision on scrapping childcare vouchers. It is said that in a letter to some of the disaffected MPs, Gordon Brown has promised that tax relief will not be removed for basic rate taxpayers. However, from 2011 any higher rate taxpayers joining the scheme will receive only basic rate tax relief. We are hoping that further details will be provided for employers in the pre-Budget Report.
Free Download
printer friendly version